RE: End of week long STEEM price downtrend
I've been thinking about the SBD peg... More specifically whether the 7 day average (for conversion of SBD to STEEM) should give more weight to the last days in order for the STEEM the user gets for his SBD to be closer to 1$.
Something like
Average of day 1
(+)
Average of day 2
(+)
Average of day 3
(+)
Average of day 4
(+)
Average of day 5
(+)
Average of day 6
(+)
Average of day 7
(+)
Average of day 7 (again)
and then /8 instead of /7 ...it's like the last day has double weight. So you get a more realistic price in STEEM from the SBDs... of course gaming the 7th day market would have a more weighted effect.
Or it can be done in a way where days 4-5-6-7 days have increasingly more weight. That's an alternative to cutting it down to 3 days which would be faster but could be manipulated easier.
the problem with a week long period, or even 3 days is that the trading markets operate on a much faster time scale. So the slippage relative to market price can be literally 50%. And that creates a very real risk factor and that reduces the value of STEEM. I know theoretically it isnt supposed to matter, but what I look at is what actually happened.
We have been in a month long downtrend and the timing roughly correlates to suspension of liquidity awards. And this is during the time of rapid userbase growth.
Maybe it is just a correction from the initial price gains and it is just a coincidence. Or maybe the market values near realtime pegs and SBD has not done a very good job and without SBD to rely on STEEM becomes that much more volatile
In theory a prolonged downtrend should not be ruled out due to inflationary tendencies, and if that happens then the convert function will always lag (due to factoring in more elevated STEEM prices that are gone by the time the conversion takes place) and be unable to get 1 sbd = 1$. I guess they'll have to work something out otherwise it's a problem for SBD that will be considered too volatile and get dumped.
a 5% inflation does not explain a 75% price decline
ok so maybe it has been 10% inflation, but still the price drop shouldnt be many multiples of the inflation rate
It also creates arbitrage opportunity for traders who want to keep exchanging between Poloniex and the internal market.